Global fixed interest May performance
The median 1 month performance in the YieldReport survey of global bond funds was 0.60% (previously 0.70%) and the median return over the last 12 months was 3.21% (previously 3.55%). May was almost as favourable as April proved to be; bond yields dropped and the Aussie dollar was weaker against all other major currencies. Accordingly 43 of 45 funds in the YieldReport survey finished the month with a positive return.
Bond yields initially rose in the lead up to FOMC’s May meeting but this trend was soon reversed and yields then fell. European bond yields fell as the ECB squashed any suggestion of a plan to cut back on its bond-purchasing programme. In the second half of the month, U.S data were somewhat on the soft side and U.S politics provided little incentive for markets to expect anything fiscally expansionary, all of which was supportive of lower yields. By the end of the month, U.S. yields at the front of the curve rose a little on the back of hawkish comments which had emanated from the FOMC’s meeting but at the long end yields fell. The 2 year yield rose 1bp to 1.28% while 10 year bond yields fell 7bps to 2.21%. and the 10 year bond yield fell 7bps.
10 year bond yields were consistently lower in all the major markets, except in Japan where they are anchored close to zero. German yields inched 2bps down to 0.30%, U.K. yields fell 4bps to 1.05%, U.S yields were 7bps lower at 2.21%, Italian yields fell 10bps to 2.18% and French yields dropped 11bps to 0.72%.
The best performing global fund for May in the YieldReport survey was the Legg Mason Western Asset Macro Opportunities Bond Fund. Its return of 1.45% follows an April performance almost as impressive. The second-highest return was produced by stablemate Legg Mason Western Asset Global Bond Fund which returned 1.41% and in third was the DDH Global Fixed Interest Alpha fund with a return of 1.15%.
Over the twelve months to May 2017, the Bentham Wholesale High Yield fund retained its top spot with a return of 14.41%. The fund has slightly increased its holdings of high yield bonds from around 93% at the end of April to just over 95% at the end of May. The rest of the portfolio comprises cash and derivatives.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.60 | 1.38 | 2.00 | 2.78 | 4.09 | |
| Alpha Diversified Income | mFund | 0.50 | 1.15 | 2.60 | 3.15 | 3.05 |
| AMP Future Directions International Bond Fund | 0.69 | 1.46 | 2.31 | 3.70 | 4.46 | |
| AMP Capital International Bond | 0.74 | 1.58 | 2.83 | 4.23 | 5.02 | |
| ANZ-CFS Global Credit Income EF | 0.10 | 0.73 | 5.18 | 2.46 | 4.42 | |
| Bentham Professional Global Income | mFund | 0.70 | 1.63 | 10.62 | 4.75 | 8.76 |
| Bentham Wholesale High Yield | mFund | 0.99 | 2.45 | 14.41 | 6.64 | 9.37 |
| Bentham Syndicated Loan ASX Class | mFund | 0.73 | 1.91 | 10.93 | 6.09 | 7.92 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.36 | 0.90 | 3.15 | 3.18 | 4.20 |
| BlackRock Monthly Income | 0.66 | 1.13 | 6.41 | 3.47 | 7.60 | |
| BlackRock Wholesale International Bond | 0.60 | 1.54 | 2.93 | 5.01 | 5.78 | |
| BT Global Fixed Interest Wholesale | 0.58 | 1.28 | 0.74 | 4.87 | 4.66 | |
| BT Institutional Enhanced Global Fixed Interest | 0.61 | 1.33 | 0.91 | 4.34 | 4.39 | |
| CFS Wholesale Global Bond | 0.50 | 1.04 | 0.53 | 4.27 | 4.61 | |
| CFS Wholesale Global Corporate Bond | 1.02 | 1.79 | 5.80 | 5.38 | 7.11 | |
| DDH Global Fixed Interest Alpha | 1.15 | 1.16 | 4.90 | -0.05 | 2.73 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.41 | 1.15 | 2.77 | 3.95 | 4.20 | |
| Dimensional Global Bond Trust | 0.71 | 1.62 | 3.97 | 5.76 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.23 | 0.73 | 2.33 | 2.58 | 2.94 | |
| Fidelity Global Strategic Bond | 0.06 | -0.44 | 4.63 | |||
| Franklin Templeton Global Aggregate Bd W | 0.98 | 2.25 | 0.04 | 4.50 | ||
| Franklin Templeton Multisector Bond I | -1.12 | 1.26 | 10.41 | 2.09 | 7.37 | |
| GAM Absolute Return Bond (AU) | 0.68 | 1.82 | 8.67 | 2.73 | 4.11 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.43 | 0.92 | 8.10 | 4.99 | 4.23 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.42 | 1.68 | 7.36 | 5.11 | 7.04 |
| Legg Mason Brandywine Global Fixed Income A | 0.41 | 1.42 | 5.64 | 5.91 | 7.02 | |
| Legg Mason Western Asset Global Bond Fund | 1.41 | 3.23 | ||||
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.45 | 4.52 | ||||
| Macquarie Global Bond | 0.48 | 1.02 | 0.65 | 4.69 | 4.72 | |
| Macquarie Global Income Opportunities Fd | 0.55 | 1.63 | 5.25 | 3.04 | 4.19 | |
| Mercer Global Credit Fund | 0.98 | 1.79 | 4.26 | 5.13 | 6.61 | |
| Mercer Global Sovereign Bond Fund | 0.85 | 2.13 | 3.00 | 6.39 | 6.14 | |
| Nikko AM International Bond | 0.56 | 1.05 | 1.95 | 5.17 | 5.54 | |
| Omega Global Corporate Bond | 0.82 | 1.64 | 3.42 | 4.52 | 5.28 | |
| PIMCO Global Bond Wholesale | mFund | 0.71 | 1.61 | 5.63 | 6.20 | 6.49 |
| PIMCO Global Credi Wholesale | mFund | 0.87 | 2.06 | 4.78 | 5.53 | 5.92 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.89 | 1.95 | 4.09 | 5.46 | 5.43 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.41 | 1.40 | 7.62 | 3.69 | N/A |
| State Street SSgA Global Fixed Income | 0.54 | 1.16 | 1.28 | 4.41 | 2.42 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.15 | -0.59 | 2.99 | 4.75 | ||
| Templeton Global Bond Plus W | -1.19 | 0.74 | 8.05 | 1.31 | 5.05 | |
| UBS Global Credit Fund | 1.01 | 1.99 | 5.80 | 5.35 | 6.51 | |
| UBS International Bond | 0.71 | 1.47 | 2.34 | 5.02 | 5.22 | |
| Vanguard International Credit Securities Index Hdg | 0.90 | 1.79 | 4.34 | 5.06 | 5.71 | |
| Vanguard International Fixed Interest Index Hdg | 0.49 | 1.09 | 1.31 | 5.26 | 5.22 |
*End of May 2017. Returns in AUD after fees.